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‘Unworkable’ Flood Re insurance scheme will exclude millions

The property industry says there are flaws in the proposed new affordable flood insurance scheme that could see flat-owners and many others left out.

‘Flood Re’, or the Flood Reinsurance Scheme, will be a not-for-profit entity, owned and managed by the insurance industry but set up via legislation.

The detail on the plans has now been published by the government, but the British Property Federation says “millions of homeowners could be left out”.

Most leasehold owners will be excluded, which will particularly effect homeowners who own flats rather than houses. Homes built post-2009 and those in council tax band H will also not be covered.

Ian Fletcher, director of policy at the British Property Federation, said: “Over the past few months we have been given myriad excuses for the exclusion of leasehold properties from Flood Re. These have ranged from the competence of computer systems, to the lack of hard evidence, to quibbling over the difference between building and contents cover.

“The fact that we achieved a small concession for leasehold blocks of three or fewer to be included within the scope of Flood Re only serves to highlight the tenuous nature of these arguments and, on that basis, we would like to see the entire leasehold sector included. The current arrangement is simply not good enough, and we will be making this very clear in our consultation response.”

The Association of British Insurers has also raised strong concerns about whether the scheme would pass muster with regulators, and on Defra’s proposal to ban the scheme from “adding more than £100m to public sector net borrowing in any given financial year”.

It says Flood Re is “unworkable if passed into law in the current state”.

The consultation on the plans runs until 16 September. Find out more, or contribute to the consultation, here.

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